Mr. Appliance Franchise

Financing Details

Mr. Appliance may offer direct financing for a portion of the initial franchise fee to qualified franchisees, with standard financing covering up to 70% and potentially up to 80% based on certain requirements. The interest rates vary from 9% to 12% annually, depending on the franchisee's credit score. Repayment terms for these loans can range from up to 5 years for amounts less than $45,000, to up to 9 years for amounts over $150,000. Monthly payments begin approximately two months after completing Phase I Training, and a promissory note and security agreement granting Mr. Appliance a security interest in the business are required. Mr. Appliance does not provide financing when brokers are involved and does not guarantee third-party obligations. In limited cases, they may also finance a portion of renewal fees at a 12% interest rate. Mr. Appliance currently does not derive income from referrals or placement of financing with any third-party lender.

Litigation Summary

Mr. Appliance has a history of legal proceedings, with five cases disclosed. In 2022, Mr. Appliance SPV LLC filed a lawsuit against a former franchisee, Scott Brand, for breach of contract. The former franchisee countersued, alleging violations of the Illinois Franchise Disclosure Act and common law fraud. This case was settled in August 2022, with the former franchisee agreeing to pay $100,000 to Mr. Appliance, and Mr. Appliance agreeing to release the non-compete covenant. Another significant case involved former franchisees, KB Industries, Kimberly Gandy, and Robert Hosier, against Mr. Appliance, LLC (the predecessor) and affiliates, filed in 2016. The plaintiffs alleged business failure due to fraudulent mishandling of credit applications by a third-party and fraudulent endorsement of that third-party's services by the predecessor. After some claims were dismissed, the remaining fraud claim against the predecessor was settled in July 2018. Additionally, there were administrative orders not directly involving Mr. Appliance SPV LLC but its affiliates. In 2017, a predecessor to an affiliate (Window Genie) and its then-president entered a consent order with California for failing to submit advertising copies, paying a $5,000 penalty. In 2010, a predecessor to another affiliate (Molly Maid) entered a consent judgment in Kansas for alleged consumer protection act violations, paying $25,000 in civil penalty and $25,175 for investigation costs. Most recently, in fiscal year 2024, Mr. Appliance SPV LLC initiated one lawsuit against a franchisee, Ezriel Green, in December 2024, to collect monies owed.

Renewal Conditions

To renew their Mr. Appliance franchise agreement, franchisees must notify Mr. Appliance in writing between 180 to 240 days before their current term expires. They must be in good standing, meaning they have not defaulted on their agreement or any related agreements, have met all financial and material obligations on time, and have received no more than two written notices of default throughout the term. Franchisees must also have met the Minimum Performance Standards for Gross Sales and Customer Satisfaction in at most two calendar years or measurement periods during the term. Additionally, they must pay a $5,000 renewal fee, complete any current training requirements, and sign the then-current version of Mr. Appliance's franchise agreement, which may include different terms, conditions, and fees. Franchisees and their guarantors are also required to sign a general release of claims.

Staffing Notes

Mr. Appliance requires franchisees to employ a sufficient number of competent and trained employees to ensure efficient customer service. Franchisees are solely responsible for ensuring that all employees and subcontractors who enter a customer's home have passed required background checks. Mr. Appliance explicitly states that it is not considered a joint employer and holds no responsibility for the franchisee's employees or employment-related matters.